Ark Invest’s Cathie Wood says China’s wide-ranging clampdown will lead to an economic downturn for the country

• Ark Invest's Cathie Wood said China's wide-ranging clampdown will lead to an economic downturn.
• "I really do think that the policymakers in China are beginning to play with fire," Wood said, according to Reuters.
• The star stock picker also doubled down on her bullishness toward Tesla stock.
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Ark Investment Management founder and CEO Cathie Wood on Tuesday said China's wide-ranging clampdown from technology to gaming will lead to an economic downturn for the country, subsequently affecting the global economy.

"I really do think that the policymakers in China are beginning to play with fire," she said during her webinar, according to Reuters. "We will look back at this period in six months and say 'Wasn't it obvious there will be a major and unexpected slowdown in China?'"

The famed stock picker said the Asian superpower's attempt to rein in various sectors increases the chances of committing policy mistakes and putting a drag on growth, Reuters reported.

For instance, China announced in August that video game time for kids should be slashed to three hours each week, while reports said the government temporarily suspended approvals of new online video games.

In July, Wood notably dumped shares of Chinese internet stocks, including Tencent and JD.com. But a month later she began buying some of them back.

"I'm not pessimistic about China in the longer run because I think they're a very entrepreneurial society," Wood told Bloomberg in September. "Sure, the government is putting more rules and regulations in, but I don't think the government wants to stop growth and progress at all."

Also in the webinar Tuesday, Wood doubled down on her bullishness towards Tesla. The electric carmaker rose 2% to clear its key $800 resistance level on Tuesday after the company announced significant sales growth in China for September.

Wood shot to prominence in 2020 thanks to her blockbuster performance driven by bets into mega-growth stocks. Her ETFs last year have delivered eye-popping returns, with her nearly $20 billion Ark Innovation flagship fund up more than 150% in 2020.